Intel Stock Has Gotten Way Ahead of Lip-Bu Tan's Turnaround Plans. Will Investors Regret Buying?

Intel (NASDAQ: INTC) has served as a cautionary tale for investors about the perils of counting on a company to remain an industry leader. Intel reached peak prominence in the 1990s during the tech boom as the key producer of microprocessors for personal computers, but a series of miscues led Intel to let its leadership position slip out of its fingers. Now, the company is scurrying to catch up to rivals Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD), both of which have passed up Intel in executing on their growth ambitions.

Now, Intel has made a leadership pivot, and CEO Lip-Bu Tan has been on the job less than a year. Tan's efforts to turn the ship around at Intel have led to some key strategic shifts, but it's still less than clear exactly what Intel will look like five years from now or whether the result of the new strategy will yield enough financial benefit to justify the big rise in Intel stock over the past year. In this third and final article on Intel for the Voyager Portfolio, you'll see more about Tan's expectations and how the investing community is responding to the chip-maker's efforts to regain the leadership mantle in the semiconductor industry.

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Intel's 3-pronged approach to getting back to business

As with most companies in the technology industry right now, Intel believes that artificial intelligence represents its best opportunity for growth over the next several years. Within the chipmaker's existing corporate structure, AI aspirations primarily fall into three categories . First, Intel hopes to keep using its core x86 central processing unit (CPU) architecture to make products that are of value to hyperscalers and other AI adopters, such as data center hardware. Second, Intel is also trying to catch up with Nvidia and AMD on the graphics processing unit (GPU) front, with its own AI accelerator chip program looking to keep building momentum.

The third element of Intel's turnaround has gotten the most attention, as Tan has expended a huge amount of leadership capital toward building up the company's identity as a U.S. based foundry for semiconductor chips. That aspect of Intel's strategic plan has gotten interest from both the public and private sectors, drawing investments from the U.S. government as well as Nvidia and SoftBank Group.

The obstacles in Intel's way

Unfortunately, Intel investors will have to be patient with the pace of the chip-maker's turnaround. Tan is frustrated with Intel's inability to meet current demand with existing capacity. He emphasizes that Intel's rebound will be a multi-year journey.

Also, Intel itself is dealing with the supply constraints that plague the tech hardware industry right now. Although the company benefits from demand for CPUs, Intel has to pay higher prices for components like memory chips and substrate wafers.

Most importantly, though, to the extent that Intel is truly relying on its foundry operations to turn the tide, the company simply hasn't shown signs of getting on track. In the fourth quarter of 2025, Intel's foundry segment brought in $4.5 billion in revenue, but it posted operating losses of $2.5 billion. Segment operating margins of -50% or worse have become par for the course for the foundry. And while the appeal of having domestic production capacity for semiconductor chips using Intel's 18A and 14A platforms is undeniable, the move only makes sense for shareholders if Intel will actually make money doing it in the long run.

Why Intel won't be in the Voyager Portfolio

Amid all this uncertainty, Intel stock has soared, taking for granted the idea that the tech giant will enjoy strong earnings growth this year and next. Yet after the stock's upward run, its forward multiple has become quite rich, at close to 50 times 2027 estimates despite calls for adjusted earnings to more than double next year.

Intel would have been a much more reasonable pick for the Voyager Portfolio six months ago, when shares fetched less than half what they cost today. At this point, Intel shares reflect too much optimism about Tan's ability to turn the company around quickly. Based on what Tan's saying, that's simply not going to happen, and Intel shareholders face yet another round of potential disappointment ahead.

Dan Caplinger has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool has a disclosure policy.